A chance encounter in 2015 led Steve Schwarzman, the septuagenarian private-equity billionaire, to become one of the biggest and most unlikely champions of artificial intelligence.
On a bus ride in Beijing with other global business leaders, the Blackstone chief executive happened to sit next to Alibaba co-founder Jack Ma, who started talking about AI. The technology, he explained, would soon change drug development and education and reshape how people across all industries do their jobs.
Nine years later, Schwarzman, 77 years old, might be the biggest individual funder of AI education and research, having pledged more than half a billion dollars to the effort.
The newly christened Schwarzman College of Computing at the Massachusetts Institute of Technology is set to open at the end of April. At Oxford University, the new Schwarzman Centre for the Humanities houses an institute for the study of the ethics of AI. They represent Schwarzman’s two biggest donations on record—a $350 million gift to MIT in 2018 followed by a grant to Oxford that ultimately totaled over £190 million, equivalent to roughly $240 million.
Steve Schwarzman inside the new Schwarzman College of Computing at MIT, which officially opens at the end of April. PHOTO: GRETCHEN ERTL
Schwarzman, whose net worth Forbes estimates at $37.7 billion, has also advocated for the technology in Washington. A major Republican donor, he worked behind the scenes to help secure passage of the Chips and Science Act of 2022. Schwarzman was particularly interested in the funding it provided for areas such as AI and quantum computing and the $80 billion-plus authorized for the National Science Foundation.
Advancing AI is an unlikely focus for a Wall Street power player who has multiple secretaries to place his phone calls and says email is his favorite app.
“You might think that the tech titans who really understand this well should be pouring money into philanthropy around this issue,” said Nigel Shadbolt, a professor of computer science at Oxford who helped design the concept for the AI ethics institute. “It’s a good thing Steve is.”
Nigel Shadbolt, a professor of computer science at Oxford, in 2018. PHOTO: ROBERTO RICCIUTI/GETTY IMAGES
Schwarzman’s enthusiasm for AI echoes other bold moves that helped build Blackstone into the $1 trillion behemoth it is today. He and co-founder Pete Peterson diversified beyond buyouts long before competitors, launching a hedge-fund business in 1990, getting into real-estate investing in 1991 and credit in 1998. Now real estate is Blackstone’s biggest business and the firm’s market capitalization is roughly double that of its closest competitors.
“Go big” is his mantra, Schwarzman wrote in his 2019 memoir.
His interest in AI piqued following the talk with Ma, the buyout chief brought it up a year later during a meeting with then-MIT president L. Rafael Reif to discuss the Schwarzman Scholars program that lets American students study at Tsinghua University in Beijing.
Schwarzman asked Reif why the technology hadn’t taken off yet. Reif said computers were only just getting to be powerful enough to put the theory of AI, which MIT had helped pioneer, into practice. Use of it would rapidly accelerate from there.
That acceleration was already under way in China, as Schwarzman noted during his frequent visits there in 2017 and 2018 to fundraise for his scholarship program. He learned about a company that sold used cars that was using AI to evaluate its fleet.
“I was concerned that the U.S. was falling behind on the most promising new technology in generations,” Schwarzman told The Wall Street Journal.
Reif, a Venezuelan-born electrical engineer, had also been thinking about how to better educate MIT’s students about AI. He wanted to weave it into the curriculum of every department and strengthen the university’s capabilities in using the technology for research.
“Data is part of every single discipline,” said Reif, who stepped down as MIT’s president at the end of 2022 after a 10-year stint. “This stuff is the new math.”
L. Rafael Reif speaking at MIT’s commencement ceremony in May 2022. PHOTO: BRIAN SNYDER/REUTERS
The conversations between Reif and Schwarzman continued over the next several years, with Reif visiting the Blackstone CEO at his Park Avenue office during trips to New York and once stopping by Schwarzman’s beachside vacation home in St. Tropez in the South of France.
Over lunch at the palm-lined mansion, Reif told Schwarzman he wanted to double the number of MIT faculty with expertise in computing while also hiring professors in other disciplines—from biology to business—who used AI to conduct their research.
The idea intrigued Schwarzman: If MIT became the first AI-enabled university, other U.S. peers would have to respond. The billionaire ultimately agreed to donate $350 million of the $1.2 billion price tag.
It was around that time that Oxford’s vice chancellor emailed Shadbolt about a potential donor who had read his book on living with smart machines and wanted to meet him. A longtime AI researcher, Shadbolt was chairman and co-founder, along with internet pioneer Tim Berners-Lee, of the Open Data Institute, a nonprofit that aims to advance trust in data by enabling organizations to use it more capably and responsibly.
Schwarzman was weighing a large gift to create a humanities center, and he wanted it to house a program focused on the ethics of AI. He identified Oxford, with its top-notch philosophy department, as the place to do it.
Schwarzman has also pushed Blackstone to use AI. The private-equity firm hired its first data scientist back in 2015 and now employs 50 of them working across its various business lines to analyze data and make predictions that inform investment decisions. The idea is that AI could help the firm’s real-estate arm predict demand for apartments or analyze LinkedIn data to understand which life-science companies are hiring and might be in need of lab space, for example.
Schwarzman joined a Zoom call last July with the CEOs of the firm’s portfolio companies in which he told them that understanding the ways they can use AI and how the technology is affecting their industries needs to be a top priority.
“When you consider that I started my career building models with a pencil and a slide rule, I’d say I’ve come a long way,” he told the Journal.
Appeared in the February 23, 2024, print edition as 'Blackstone’s CEO a Booster of AI'.